HOW TO INVEST SMARTLY

 WHY INVEST

Everyone needs to save some money for the future. Be it children’s education or marriage or for their own retirement. Any unseen event in our lives also needs money. For a new home or buying a luxury car, we need a big amount of money which needs to be invested years back. Investing money is putting your money to work. It is a means to a happier ending. Putting our hard-earned money into a different type of investment vehicles in the hopes of growing our money over time.

SO THE QUESTION IS WHEN AND WHERE TO START INVESTING

“Start investing as soon as possible” is the mantra of growing your money at a substantial rate over a period of time. The sooner you start the better it is. Most Indians are conservative investors at the start of their carriers. But because they don’t have large chunks of money to invest at one go, they mostly prefer BANK FD’S. Which is risk-free and guarantees fixed returns. Fix deposit with SBI   in 1995 offered a 13% rate of interest on deposits of more than three years. It was an attractive offer, and the fact that income levels were low and many individuals fell in the lower tax bracket, meant double-digit return post-tax.

Bank RD is another option for small investors in which they can put a little amount every month aside and watch it grow. We shouldn’t forget the power of compounding.

THINGS HAVE CHANGED DRAMATICALLY SINCE THEN

A quick calculation shows that investment in FD’S doesn’t make sense for people in high tax bracket but it’s good for starters who have small amounts to invest with a conservative approach. However, over the last couple of years, that comfort too has shaken- first in PMC Bank and then YES Bank. moreover, if there is any default in maturity payment from the bank, deposit insurance would cover payment only up to 5 lakh. Actually now FD’S don’t serve the purpose of growing money with low-interest rates. With the high inflation rate, it just serves the purpose of keeping some liquid money aside. But most retirees and people who want risk free returns still prefer to rely on bank FDs, which is fine.

STOCKS AND OTHER FINANCIAL INSTRUMENTS

Beginners, as well as long term investors, can think of investing in the Stock market and related instruments. The financial instruments that are specifically traded in the Stock market are shares/stocks, Derivatives, Bonds and Mutual funds Anyone can invest the desired amount in securities. For small and regular investments SIP(systematic investment plan) is also good with less tension.

Options trading is picking up these days on the stock market. Options are conditional derivatives contracts that allow buyers of the contracts(option holders) to buy or sell a security at a chosen price option buyers are charged an amount called a “PREMIUM” by the sellers for such a right.

GOLD AND SILVER

Precious metals like GOLD and SILVER have their place in every investor’s portfolio for long. But each of them has their unique risks and opportunities.

To put it simply, when hoarders feel like selling, the prices drop. When they want to buy, a new supply is quickly absorbed and prices are driven higher.

REAL ESTATE

Real estate is always been the first love of Indian investors. It is the most globally recognised sector. The construction industry ranks third among the 14 major sectors in terms of direct, indirect and induced effects in all sectors of the economy. Responding to an increasingly well-informed consumer base and bearing in mind the aspect of globalisation, Indian real estate developers have shifted gears and accepted fresh challenges. The growing flow of FDI in Indian real estate is encouraging increased transparency.

So these are a few ways of investing.

 SAVING IS IMPORTANT NO MATTER HOW YOU INVEST

None of the blogs or opinions expressed within are meant as advice to you or anybody else on any matter, including but not limited to, personal finance, health, or other matters of life. If you need advice, speak to a professional!

Published by Anita Vij

A caring mother of 2. A loving wife. An aspiring individual who wishes to share her life-long learnings with the rest of the world.

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